NNPC eyes foreign crude supply for Dangote Refinery as fuel prices rise

The Federal Government, through the Nigerian National Petroleum Company Limited (NNPC Ltd), is exploring options to supply crude oil to the Dangote Petroleum Refinery through third-party international traders in an effort to sustain domestic refining operations.

However, industry officials say the move may not immediately reduce petrol prices for Nigerians, who are already grappling with rising fuel costs following recent price adjustments by the $20bn Lekki-based refinery.

Sources in the oil sector told The PUNCH that the refinery recently suspended the loading of Premium Motor Spirit (PMS), also known as petrol, temporarily — a development that has fuelled speculation of another price increase.

If implemented, it would mark the third petrol price hike within a week after gantry prices climbed from N774 to N995 per litre. Consequently, pump prices in several states have crossed N1,000 per litre, with some filling stations selling as high as N1,200 per litre, worsening the economic burden on consumers.

The rising costs have also heightened concerns about potential increases in transport fares and the price of goods across the country.

Industry analysts say global market conditions are also playing a role. Crude oil prices have surged amid geopolitical tensions in the Middle East, particularly the ongoing Iran–United States conflict, which has disrupted oil supply chains and pushed Brent crude above $92 per barrel. Concerns over instability around the Strait of Hormuz — a major global energy shipping route — have further tightened supply.

Officials from both NNPC and the Dangote refinery confirmed that the national oil company is leveraging its global trading network to secure crude supplies from international sources for the refinery.

A senior NNPC official, who spoke on condition of anonymity because he was not authorised to comment publicly, said the company remains committed to supporting domestic refining.

“Leveraging our global crude trading network, we are sourcing third-party crude for the refinery at prices competitive with prevailing international market rates,” the official said.

“As the national oil company entrusted with safeguarding Nigeria’s energy security, NNPC Limited remains fully committed to supporting domestic refining, including the Dangote Petroleum Refinery.”

Despite this intervention, the refinery has cautioned that sourcing crude internationally will not necessarily lead to an immediate drop in fuel prices due to high global energy costs.

According to a refinery source, tensions in the Middle East have pushed up prices of crude oil, liquefied natural gas and other fuels globally, directly affecting refined product prices.

The refinery also cited inadequate domestic crude supply as a major challenge. Under the naira-for-crude arrangement with the government, the refinery requires about 13 cargoes of crude per month, but currently receives only five cargoes from NNPC.

“While we receive about five cargoes monthly from NNPC, which we pay for in naira, these fall short of the 13 cargoes required to support domestic supply,” the source explained.

Industry stakeholders say full implementation of the naira-for-crude policy could help moderate petrol prices.

The National Publicity Secretary of the Crude Oil Refinery Owners Association of Nigeria, Eche Idoko, noted that the policy could reduce local costs if domestic refiners receive adequate crude allocations.

He warned, however, that heavy reliance on imported crude means global market prices will continue to influence petrol costs.

“Dangote needs about 14 cargoes of crude from the government under the naira-for-crude policy to meet demand. As long as most of the crude is sourced internationally, the refinery will transfer those costs to Nigerian consumers,” he said.

Energy analyst and Chief Executive Officer of Petroleumprice.ng, Jeremiah Olatide, also pointed to limited import licences as a factor shaping the market.

According to him, nearly 90 per cent of marketers who applied for petrol import permits this year were not granted approvals, a move aimed at promoting local refining.

“Imports should ideally account for only 20 to 25 per cent of total supply, with the rest refined locally. That balance would improve energy security and stabilise prices,” he said.

Despite the price pressures, Olatide argued that the Dangote refinery has helped cushion Nigerians from even higher fuel costs.

“If the refinery was not operating, petrol prices in Nigeria could easily have reached N1,500 per litre,” he added.

Data from Kpler analytics also show Nigeria’s growing reliance on imported crude oil. Crude imports from the United States rose sharply to 41.13 million barrels in 2025, representing a 161 per cent increase from 15.79 million barrels in 2024.

The trend reflects the refinery’s increasing dependence on foreign crude. In July 2025 alone, Dangote imported about 590,000 barrels per day, with 60 per cent sourced from US light sweet crude and 40 per cent from Nigerian grades — the first time US supply exceeded local crude intake.

Meanwhile, the Nigerian Upstream Petroleum Regulatory Commission reported that between January and August 2025, domestic refiners received 67.66 million barrels of crude, far below the 123.48 million barrels they requested.

Amid the supply challenges, the Dangote refinery has expanded its distribution network by approving more petroleum marketers to lift petrol nationwide.

The number of approved partners has increased from 13 to more than 30, including NIPCO Plc, MRS Oil Nigeria Plc, TotalEnergies Marketing Nigeria Plc and Conoil Plc.

With petrol currently selling between N1,030 and N1,100 per litre in major cities, transport operators have begun raising fares, and consumers are bracing for a ripple effect on the cost of living across the country.